Will Hipsters Buy Cars?

NEW YORK (MainStreet)—Zachary Gayle, an unemployed 18-year-old in New York City, says he doesn't have enough money to buy a car—not that he's bothered by the fact.

"If I had the funds, I would not get a car," he said. "A car is, like, the worst thing you can invest in. You buy it, and it just loses value immediately after you drive it off of the lot...I'm not going to buy a car, probably ever."

With Millennials increasingly moving to cities and scaling back expenses, they are more commonly of Gayle's mindset and doing without vehicle purchases. Add to that the rise of car-share and p2p programs, and auto companies are left grasping at straws to try to get through to a cohort that increasingly eschews its offerings.

"Millennials are really savvy about blocking out marketing messages," said Sheryl Connelly from Ford's Global Trends and Future team who led a panel discussion this summer called 'Hipsters Hate Cars.' "They've grown up with all this technology, and they know Internet ad-blockers and RSS feeds...so it's much harder for a traditional marketer to reach them."

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Plus, getting a license used to be a rite of passage and the true milestone of independence. Not so much anymore with less enthusiasm around the mobility and independence a set of wheels can offer.

A third of all licensed drivers in the U.S. were under 30 in 1983, a figure that's dropped to 22% today despite the 80 million strong Millennial population, according to University of Michigan's Transportation Research Institute. Even the miles driven plummeted: those between 16 and 34 years old averaged 10,300 miles annually as recently as 2001, a figure that dropped to 7,900 annually come 2009. And forget about teens: whereas 69% of 17-year-olds were licensed back in 1983, only 50% were in 2008.

The initial sunk cost is not chump change: driver's education, once free, now costs between $200 and $800, and to add a teenage driver onto your insurance policy can cost upwards of $2,500 a year—not to mention the $30,000 average for a new car. But that hefty premium alone can't explain this pattern of Millennials who are balking at the prospect of driving.

Social Media Transportation

One contributing factor to this trend stems from the fact that 41% of Millennials in the U.S. want to live in cities, where public transportation and bike sharing programs reduce the need for a personal automobile. What's more, people are able to connect through social media instead of in-person, making the acquisition of the car less a rite of passage.

"Modern technology allows us to transcend time and space so that we can feel like we're with our friends and family—even if we are apart," Connelly said. "I also think that the car as the quintessential status symbol [has faded]. It used to be you turned 16 in the '70s, '80s, maybe in the '90s, the car was the gateway purchase into adulthood. And now people would say the cellphone is the gateway purchase into adulthood."

Jonathan Frausto, 21, a hair stylist at Bumble and Bumble in New York City, agrees. He used to own a car when living in California but finds having a car is not as necessary now, especially in an era of broadband and 3G connections.

"Now that it's easier to connect to people through all these different websites, it's like you don't see people making much of an initiative to, like, drive out and see someone," he said.

Connelly and Ford want to change that mentality.

Ford is hatching plans to provide 100 influencers in the social media space with the Ford Fiesta for six months, a project the company undertook once before.

To boot, Ford wants to appeal to a generation of digital natives by creating a more seamless transition from the home or the office into the car.

"I think we live in a world of constant connectivity, and the level of connection we have at home or work is the same level that we expect to have at every point in between," Connelly said. "So you have all these drivers and passengers that are bringing these handheld devices into the car, and they're saying, 'I still want access.'"

Ford pioneered Sync, its platform that pairs with any Bluetooth-enabled device with the audio system such that the device becomes hands-free, voice-activated. For just $300, a driver can then access texts or stream Pandora without taking his eyes off the road.

Will The Hipster Trade The Fixie for a Ford?

So how to market to a navel-gazing contingent of society? In-car social media capabilities may not be enough.

"The Millennial market is known for its desire to be very expressive and individualistic—it's one of their hallmarks," Connelly said.

Pew Research, for example, indicates that 60% of Millennials have some sort of tattoo, and if you have one, the research concludes, you're likely to have four. As such, Ford introduced wrap-around decals that allow owners to tattoo their car in a sense.

"It's a lot less expensive than when you change your mind and decide that that tattoo doesn't really fit your lifestyle anymore," Connelly said.

But gimmicks and pandering may not be so necessary.

That's because the struggle for auto-makers to crack the code of appealing to Millennials isn't quite so dire, according to Jason Dorsey, chief strategy officer at The Center for Generational Kinetics and the soi-disant "Gen Y Guy."

"Frankly, everybody's running around saying, 'The sky is falling, cars will not sell,' and that's just not true," said Dorsey. "The reality is, we're still going to buy cars—in fact, we're going to buy tons of cars—we're just pushing that back later."

Those big car buying moments, when someone graduates, gets that first job, gets married or has a kid have all shifted back dramatically.

"What the car industry as a whole is trying to figure out is 'how do we reach this group?' and then 'what do they actually want?'" Dorsey said.

"Automakers are going to start to get to smaller vehicles, with more bells and whistles and fancy stuff that connects to their lifestyle. So I certainly want to know my status updates and be able to post a picture and have these conversations when I'm around the vehicle."

That may not be enough to convince Taylor Horner, 23, a freelance model and performer in New York City. "With the economy the way it is, I don't think a lot of people can really afford to buy a car or even finance a car," he said. "People our age don't usually have credit."

Nor will it convince Amber Hunnicutt, a 23-year-old employee at NYU Steinhart's alumni relations office, to get a new car. She just sold her 2007 Chevrolet Impala, which was sitting in her parents' driveway in Virginia, in order to have enough money for the security deposit on her new apartment in the Crown Heights neighborhood of Brooklyn.

Still, Dorsey thinks something's got to give eventually in the economy, and these Millennials will reach a point when they're ready for a car.

"There's a whole other group that really lives up to the stereotype—being entitled, and being lazy, and taking selfies all day," Dorsey said. "Millennials don't fit that one box. You're seeing a whole group here that is poised to buy cars, eventually get houses and move in that more traditional path, and the other group is just delayed... The bigger market opportunity is there; it's just been delayed, skinny jeans or not."

Beating Gen Y At Its Own Game

All Ford can do is give city denizens exposure to the brand.

"One of the things that are said about Millennials is that they're born with a silver spoon in their mouth," Connelly says. "And now these kids are at a crossroads where they have an appetite for the finer things, a very sophisticated palate, but Target has taught them they can get designer goods at discount prices. And so the way that they have access to these things in the face of limited financial resources, is to rent, is to share, is to borrow." Ford's response to that is to partner with Zipcar if its potential consumers are going to be using car sharing services. To date, 145,000 have driven Ford vehicles through Zipcar.

"We're still engaging those potential consumers even if they're not in the six month buying purview," Connelly said. "And they may never leave Zipcar, but if they do find themselves in a life-stage or regional situation where they do need their own car, we know that our vehicles are more likely to be at the top of their consideration set, because of that exposure."

--Written by Ross Kenneth Urken for MainStreet

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